UK jobless rate hits 5.1%; reopening hopes lift leisure stocks, but tech slides – as it happened

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Time for a recap. Unemployment in the UK has hit its highest leve.....o Congress

Closing summary

Time for a recap.

Unemployment in the UK has hit its highest level in almost five years, as the Covid-19 pandemic continues to hit the labour market.

The jobless rate hit 5.1% in the October-December quarter, with over 1.7m people now out of work and looking for a job.

But with the number of people on payrolls rising again, the labour market may be stabilising.

Economists warned that the data didn’t cover the full scale of unemployment, with many jobs being protected by the furlough scheme.

Unemployment is expected to keep rising, to perhaps 6.5% by the end of the year, putting pressure on the government to extend the furlough job retention scheme.

Chancellor Rishi Sunak said that every job lost was a personal tragedy, pledging to set out the next stage of the government’s Plan for Jobs in next week’s budget.

But his Labour opposite number, Anneliese Dodds, said the chancellor had helped create the jobs crisis by waiting too long to extend the furlough scheme last autumn.

In the City, shares in property firms, hospitality chains and travel companies have jumped after the government outlined its plans to reopen the UK economy over the next few months.

Optimism over the prospect of an economic revival this year has also lifted the pound to a new three-year high against the US dollar, at above $1.41.

Technology stocks are under pressure, though, amid fears that rising inflation will force central banks to tighten monetary policy sooner than expected. Electric car maker Tesla slumped by 9% at one stage, taking a dent out of Elon Musk’s fortune.

The wider Nasdaq Composite is down over 2.3% now, having hits its lowest level since the end of January.

Bitcoin also tumbled, dropping 15% to around $47,100 right now after a parabolic surge in recent weeks.

US Federal Reserve chair Jerome Powell has tried to calm market nerves by insisting that it will take time to repair the US economy.

He told the Senate Finance Committee that:

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved.”

And in another sign of Covid-19’s impact, HSBC is to reduce its office space around the world by nearly 40%. It’s part of sweeping cost cutting designed to capitalise on new part-office-part-homeworking arrangements after the pandemic.

Goodnight! GW


European stock markets had a mixed day, with small gains in London and Paris, but losses in Frankfurt and Milan.

Spain’s IBEX was the outperformer, though, jumping by 1.7%. Real estate firms, consumer cyclicals and banks were the best performers -- all firms that would benefit from an easing of lockdown restrictions.

European stock markets, February 23 2021
European stock markets, February 23 2021 Photograph: Refinitiv

Gordon Ramsay has suffered his own kitchen nightmare during the pandemic with his restaurant empire missing out on nearly £60m of trade.

The celebrity chef said that in December his 35 UK restaurants had £10m worth of reservations “wiped out overnight” when coronavirus restrictions were reimposed.

“As of 19 March to 3 February this year we’ve suffered £57.5m worth of turnover down,” said Ramsay. “I’m in it.”

A Sports Direct store in Leicester.
A Sports Direct store in Leicester. Photograph: Joe Giddens/PA

The reopening of the UK economy can’t come soon enough for Frasers Group, the retailer controlled by Sports Direct founder, Mike Ashley.

It expects to take a hit of more than £100m after the government said non-essential retailers in England would have to wait until 12 April at the earliest to reopen.

The group, which includes Sports Direct, House of Fraser and Flannels, said the sum reflected expected writedowns of the value of its properties and other assets.

It told the City this morning:

“Given the length of this current lockdown, potential systemic changes to consumer behaviour and the risk of further restrictions in future, we believe this non-cash impairment could be in excess of £100m.”


Here’s Michael Hewson of CMC Markets on the stock market rally in companies who should benefit from Boris Johnson’s reopening plan:

Premier Inn owner Whitbread is also well on the way to wiping out its pandemic losses, its shares back at their highest levels in almost 12 months, while pub chain JD Wetherspoon shares have also returned to levels last seen a year ago.

The prevailing optimism is also feeding into the likes of Cineworld, whose shares have risen to an 8-month high, along with Hollywood Bowl, whose shares hit an eleven month high earlier today.

Commercial real estate companies Hammerson, British Land and Land Securities are also getting a reopening optimism lift, in the hope that shopping centres will soon reopen and fill up with consumers again.

Property, airlines and hospitality stocks rally, but tech struggles

While growth stocks such as tech firms struggle, companies badly hurt by the pandemic such as airlines, hotel groups and property companies have had a good day.

Commercial property groups British Land (+5.4%) and Land Securities (+4.4%) are the top risers on the FTSE 100 index in London today.

Travel and hospitality groups also rallied, after the UK outlined its four-stage plan to reopen the economy over the next few months.

Budget airline easyJet gained 4.5%, and British Airways parent company IAG rose by nearly 2%, as airlines and travel companies reported a surge in holiday bookings:

Smaller hospitality firms also rallied strongly, with Cineworld gaining 9.5% on hopes that cinemas will reopen in mid-May (as Boris Johnson outlined yesterday).

SSP Group surged 17%, as investors anticipated a pick-up in sales at its Upper Crust and Caffè Ritazza stores once holidaymakers and commuters return to airports and railway stations.

Cider maker C&C Group jumped 9%, on the prospect of outdoor drinking resuming in mid-April, followed by indoor drinking in 17 May.

Richard Morawetz, a vice president at Moody’s says the leisure sector should be boosted by a jump in consumer confidence, and spending, as the lockdown eases.

“The gradual easing of lockdown restrictions, assuming no reversal, will support the resumption of operations and a revival in earnings in numerous sectors, and principally in those that rely on the free movement of people, such as tourism, retail and leisure activities.

This will be reinforced by the roll-out of the vaccination program, which will boost consumer confidence and consumption in the sectors that have been most affected by lockdowns.”

The UK’s FTSE 100 has closed 13 points higher at 6625, while the smaller FTSE 250 gained 0.4%.

The market was dragged back by technology firms, with tech investor Scottish Mortgage Investment Trust falling 5% and online grocer Ocado off 2.7%.

The FTSE 100 by sector, 23 February 2021
The FTSE 100 by sector today Photograph: Refinitiv

Nick Wood, head of fund research at Quilter, says a rotation from ‘growth’ to ‘value’ may be underway...and may create opportunities:

“Every year we get some sort of market correction that throws everyone off balance. It certainly appears as if the market could be shifting in sentiment given the rise in bond yields and the sell-off we are seeing in tech focused names. Indeed, should this be a prolonged sell-off there will be some who will think that tech has had its day in the sun, at least for now.

“The key for investors is to block out the noise and remember your reasons for investing, but it is still worth keeping an eye on should we see a more sustained rotation to the more value orientated section of the market. Investors should also be mindful of portfolio balance, and not having all their eggs in one particular style or size basket. Despite the volatility, tech remains an important part of a portfolio given the trends seen since the pandemic, but this should serve as a reminder of the importance of being diversified.

“This correction will hurt some fund groups more than others. For example, Baillie Gifford has a high weighting towards growth and tech stocks, and thus will be going through a period of weak performance, albeit in many cases on the back of an extremely strong 2020. Indeed, we have seen its flagship investment trust, Scottish Mortgage, experience sharp share price falls over the past couple of days. This will cause many investors to begin to question these funds and if they still have a place within a portfolio as we emerge from the Covid pandemic.

“However, while this might be the start of a short-term dip for the likes of Baillie Gifford and the more growth focused managers, it could present an attractive entry point for investors. Given the falls experienced and the volatility it is showing, should Scottish Mortgage fall to a discount then investors should consider this a buying opportunity given the long-term track record the team has exhibited, as well as the quality of the portfolio.”


The tech selloff is easing off, a little. Tesla is now only down 4% at $685, while the Nasdaq Composite is down 1.6% in edgy trading.

Sterling hits $1.41 vs US dollar

The pound has risen to a fresh near-three-year high against the US dollar.

Sterling has hit $1.411 against the greenback for the first time since April 2018.

The pound vs the US dollar over the last five years
The pound vs the US dollar over the last five years Photograph: Refinitiv

The pound has been boosted in recent weeks by the success of the UK’s Covid-19 vaccination, and hopes that the economy will reopen this summer.

Craig Erlam of OANDA explains:

The recovery this year is going to be consumer driven, with pent up demand and increased aggregate savings being unleashed as people break free of their homes and enjoy the kinds of experiences that have been kept from them for so long.

The dollar, meanwhile, is weaker as Federal Reserve chair Jerome Powell testifies to Congress - insisting that the Fed will use “its full range of tools” to support the economy.

Powell: Vaccinations are key

Federal Reserve chair Jerome Powell is testifying to the Senate Finance Committee now, and maintaining a dovish approach.

He explains that the most important thing for the economy now is the Covid-19 vaccination programme.

Powell also warns that there is a ‘long way to go’ until the US has a full economic recovery -- another sign that the Fed isn’t in a rush to tighten policy.

And on inflation, Powell says there could be a temporary move higher due to base effects, but he doesn’t expect a large or persistent surge in inflation if consumer spending picks up substantially later this year.

Fed chair Powell: inflation is still soft

Just in: America’s top central banker has warned that inflation and employment remain well below the Federal Reserve’s goals.

In his prepared testimony to Congress, Fed chair Jerome Powell says it will probably take “some time” to achieve substantial progress on bringing inflation to target and lowering unemployment.

This, as expected, is an indication from Powell that the current ultra-loose monetary policy will remain in place for some time.

CNBC has the details.

Despite a sharp rise this year in bond yields that has accompanied heightened concern over inflation, Powell said price pressures remain mostly muted and the economic outlook is still “highly uncertain.”

“The economy is a long way from our employment and inflation goals, and it is likely to take some time for substantial further progress to be achieved,” the Fed chief said in prepared remarks for the Senate Finance Committee.

He added that the Fed is “committed to using our full range of tools to support the economy and to help ensure that the recovery from this difficult period will be as robust as possible.”

Powell also flagged up that the economic damage caused by the pandemic means inflation is still notably soft in parts of the economy:

“Following large declines in the spring, consumer prices partially rebounded over the rest of last year. However, for some of the sectors that have been most adversely affected by the pandemic, prices remain particularly soft,” he said.

“Overall, on a 12-month basis, inflation remains below our 2 percent longer-run objective.”

Here’s Fawad Razaqzada, analyst at Think Markets, on today’s moves:

It is rare to see the markets providing so many mixed signals. Technology names have been hammered, as too have cryptos with Bitcoin falling more than 10% and below the key $50K level. Yet, it is not entirely risk off, with some European indices being sharply in the black, while others are lower. Commodities that are sensitive to the economy, which have been outperforming, were also lower at the time of writing. So, what the hell is going on?

Razaqzada reckons twp factors are in play:

  • First, the fact that techs are falling and value stocks have been outperforming along with copper and crude oil are clear signs of rotation into assets that are expected to do well during good economic times. If this is the case, then the weakness for technology shares could be short-lived, and dip buyers will be happy to get back in at relatively inexpensive levels again.

  • But the flip side of the above argument is that the markets may have already priced in much of the prospective global recovery, spurred by vaccines and stimulus. Will rising inflation expectations become a reality? If so, could major central banks start ending emergency easing programmes that have supported global markets so far? This is the key risk facing the markets in the months ahead and so trading could become two-ways again rather than just up, up and more up for major US equity indices.

Tesla (-9%) isn’t the only major tech stock struggling today.

Apple is down 3.5%, Amazon has lost 2.2%, Alphabet (Google) has fallen by 2.3% and Microsoft has lost 1.7% in early trading.


US stock market opens lower, as Tesla shares slide

Wall Street has opened in the red, with technology stocks falling sharply.

The Dow Jones industrial average has dropped by 126 points, or 0.4%, to 31,394 points. The wider S&P 500 index is down 1%.

The Nasdaq composite is down 2.8%, or 377 points, at 13,155.

And Tesla is leading the selloff, tumbling 10% to $638.

That’s its lowest level since the end of December, erasing the electric car company’s gains for 2021. Back in late January, it briefly hit $900.

Over in the US, house prices have jumped at the fastest rate in almost seven years.

Home prices nationally increased by 10.4% year-on-year in December, according to the S&P/Case-Shiller home price index.

Prices in the 20 largest metro areas jumped by 10.1%, the biggest annual rise since April 2014, with low borrowing costs and limited supply encouraging buyers to pay more.

UK retailers see sharp fall in sales and mounting job losses,

Worryingly, job losses across the UK’s wholesale and retail sectors have hit a record.

The CBI’s latest ‘distributive trades’ survey, released this morning, shows that retail sales kept falling in the year to February. With internet sales growing at record pace, retail groups kept laying off staff.

Employment across the wider distributive sector (retailers, wholesalers and car dealers) fell at the fastest pace since the survey began in 1983.

The oil price has hit a new 13-month high today, lifted by the prospect of lockdown measures easing.

Brent crude traded as high as $66.79 per barrel, its highest since early January 2020, before dipping back.

It has risen steadily since November, when the first successful vaccine trial results raised hopes of an economic recovery in 2021.

The Brent crude oil price over the last two years
The Brent crude oil price over the last two years Photograph: Refinitiv


Bill Gates also struck a cautious note on bitcoin, telling Bloomberg TV yesterday that he’s not bullish about the cryptocurrency.

Gates warned against retail investors being swept up in speculative “manias” - especially if they aren’t as rich as Elon Musk - and also cited its hefty energy demands, and the way it allows anonymous transactions.

But, Gates does believe digital money is a good thing; saying the increased use of digital money by some emerging economies to get cash to citizens during the pandemic is a ‘super-positive’ move.


Elon Musk, the maverick boss of Tesla, is no longer the world’s richest person after shares in the electric car company dropped 8.6% on Monday, wiping $15.2bn (£10.8bn) off his fortune.

Musk, who last month leapfrogged Amazon founder Jeff Bezos to take the title of the world’s wealthiest person, dropped back into second place with a $183bn estimated fortune behind Bezos’ $186.3bn.

The technology selloff is gathering pace, with the Nasdaq index on track to fall 1% when trading begins.

In London, shares in Scottish Management Investment Trust are now down 10%, while its fund manager, Edinburgh’s Baillie Gifford, have dropped 11%.

Baillie Gifford were an early investor in Tesla - a move which generated huge profits - and also hold investments in other major tech stocks including Amazon and Alibaba.

Bitcoin was ‘ripe’ for a technical pullback after its parabolic surge, argues Neil Wilson of

And this week’s selloff shows the perils of Tesla’s crypto investment, he explains:

When companies tie themselves to any one horse it presents risks, even if it’s the most-fancied filly at the post. Thoroughbreds are temperamental creatures and liable to break down when being ridden too hard. So, when Tesla tied its fortunes to Bitcoin with a $1.5bn investment, it was reasonable to expect there could be problems ahead. Yesterday, for various reasons Bitcoin crashed from an all-time high in a brutally swift drop that took prices from near to $58,000 to $47,400.

At one point, prices plunged $5,000 in 10 minutes before paring losses and attempting a recovery, which stalled at $55k before turning lower to trade under $49,000 this morning.

Musk may have spooked some participants with his tweet saying the price was ‘too high’. But I feel that was an in-joke for followers. More importantly the market was ripe for a sharp technical pullback after a parabolic move, the kind that usually comes down under its own weight.

There could be further to tumble - a 30% drawdown as we had in January this year would see prices back to $40,000. Also, Treasury secretary Janet Yellen – clearly not a cheerleader - warned that “Bitcoin is an extremely inefficient way of conducting transactions and the amount of energy that’s consumed in processing those transactions is staggering”.

Bitcoin tumbles

Cryptocurrency bitcoin is tumbling today, falling sharply back from its record highs.

It’s currently trading around $46,500 - down over 15% today, and 20% off Sunday night’s peak of $58,445, following losses on Monday.

That’s its lowest level in over a week:

The price of bitcoin
The price of bitcoin Photograph: Refinitiv

But it still leaves bitcoin up over 50% so far this year, following a remarkable surge.

The selloff comes after US Treasury Secretary Janet Yellen warned yesterday that bitcoin is an “extremely inefficient” way to conduct monetary transactions, and often used for illicit means.

She told CNBC on Monday that:

I don’t think that bitcoin … is widely used as a transaction mechanism.

“To the extent it is used I fear it’s often for illicit finance. It’s an extremely inefficient way of conducting transactions, and the amount of energy that’s consumed in processing those transactions is staggering.”

Bitcoin shot to a string of record highs in recent weeks, particularly after electric car company Tesla revealed it had bought $1.5bn of bitcoin in January.

Over the weekend, Tesla’s Elon Musk tweeted that bitcoin, and fellow cryptocurrency ethereum “do seem high lol” - which may have contributed to this week’s declines:

Shares in Tesla fell over 8% yesterday, and are down another 5% in pre-market trading....


Larry Elliott: Labour market faces crunch when wage subsidies end

Today’s jobs report presents a mixed, and somewhat confusing picture, explains our economics editor Larry Elliott:

On one reading of the latest unemployment figures, the UK labour market is in pretty good shape. The number of people being added to payrolls is going up and so is the number of job vacancies. Annual earnings growth is up sharply to 4.7%.

An alternative reading is that the jobless total is going up along with the redundancy rate, while the number of people employed is going down.

But the big issue is clear -- a crunch is coming once the furlough scheme is phased out (either at the end of April, or later if Rishi Sunak extends it into the summer)....

Back on the jobless figures... and Cathal Kennedy, European economist at RBC Capital Markets, warns that today’s data doesn’t show the extend of unemployment in the UK:

The unemployment rate itself is likely already higher than the 5.1% estimated. The MPC [Bank of England Monetary Policy Committee] has identified two issues in that regard.

The first is that its thought that the number of foreign-born residents in the UK has fallen which means that the LFS is likely overstating the total number of employees in the economy.

The second is that because of pandemic related restrictions, a number of those out of work at present are not ‘actively seeking employment’ and therefore not classified as unemployment under the LFS definition.

It wasn’t explored in detail in the MPR but Governor Bailey recently commented that the BoE thought that the true level of UK unemployment was closer to 6.5%.


Here’s that eurozone inflation report:

Over in the eurozone, inflation has picked up - highlighting the squeeze on living costs as energy prices rise and economies reopen.

Annual inflation across the euro area was 0.9% in January 2021, up from -0.3% in December, according to eurostat.

Josie Dent of the CEBR think tank explains:

Despite ongoing restrictions in the eurozone placing limits on consumer demand, inflation jumped by 1.2 percentage points between December and January to stand at 0.9%. Higher energy prices and shipping costs drove up the price level in January.

As restrictions are eased heading into summer, we could see demand start to place further upwards pressure on inflation.”


Despite the rally in holiday and hospitality companies, the wider FTSE 100 share index is down 30 points or 0.5% at 6577 points.

Tech companies are under pressures, with online grocer Ocado down 4.3%, internet security firm Avast dropping 4.4% and Scottish Management Investment Trust (which holds stakes in US tech giants) shedding 5%.

The FTSE 250, which is more focused on UK stocks, is up 0.6%.

European markets are also in the red, after technology stocks fell on Wall Street yesterday (the Nasdaq lost 2.5%). Germany’s DAX has lost over 1%.

European stock markets, February 23
European stock markets, February 23 Photograph: Refinitiv

The recent rise in US government bond yields has signalled that investors are getting jumpier about rising inflation.

The possibility that central banks could slow their money-printing stimulus programmes and raise interest rates earlier than expected will weigh on tech stocks, as AJ Bell investment director Russ Mould explains:

“The Nasdaq fell nearly 2.5% as investors dumped names like Apple and Amazon amid growing concerns about rising inflation expectations, the direction of interest rates and how that would put tech stock valuations into question.

Federal Reserve chair Jerome Powell could calm those fears, or not, when he testifies to Congress later today....


Boris Johnson’s reopening roadmap has accelerated the recovery in travel and hospitality stocks, says Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown:

The palpable sigh of relief that there are dates to target for struggling pub and restaurant chains, has translated into a share price rally for the sectors.

Although international travel won’t begin until at least 17th May, news that the government’s global taskforce will reconvene in April to recommend how holidays can resume has been a boost for the industry which has been anxious for a sense of direction.

Restaurants and bars who poured money into providing outdoor dining, may start to see more return on their investment given customers can return to exterior spaces from April 12th.

Many innovative solutions like pop-up waterproof booths, terraces on parking spaces and retractable awnings have been mothballed despite high hopes they would help lure in customers during winter months. Many of these creative endeavours have gone to waste during lockdowns but could still come into their own as restrictions ease.

Indoor dining and hotel stays won’t resume until May 17th, so the next few months is still likely to see a further drain on finances for many struggling travel and hospitality businesses. All eyes will be on further announcements expected on Budget day about the extension to the furlough scheme and fresh emergency funding for companies at risk.’’

Travel and hospitality shares surge on reopening optimism

A swimming pool at the Pollina Resort on the northern coast of Sicily, Italy, last summer
A swimming pool at the Pollina Resort on the northern coast of Sicily, Italy, last summer Photograph: Antonio Parrinello/Reuters

In the City, shares in holiday companies and hospitality firms are rallying, after the UK government outlined its four-stage plan to end the Covid-19 lockdown.

Rolls-Royce, the jet engine maker, has jumped by 9% to the top of the FTSE 100 risers, followed by IAG (+5.6%) the airline group behind British Airways.

Commercial property groups Land Securities (+3.9%) and British Land (+3.7%), catering group Compass (+3.8%) and hotel chains Intercontinental (+3.2%) and Whitbread (+3.2%) are also in the risers.

Among smaller stocks, SSP (which runs Caffè Ritazza and Upper Crust sites at railway stations and airports) has surged 17%, as investors anticipate a pick-up in demand for coffees and snacks from commuters.

Cinema chains are in demand too, with Rank up 9.5% and Cineworld gaining 9% on the prospect of screens being open again.

Holiday firms have reported a surge in bookings this week, as people plan head for life after lockdown, lifting shares in budget airline easyJet up over 8% this morning.

Last night, Boris Johnson outlined a cautious reopening strategy, with shops, pubs, gyms and holiday lets closed until at least 12 April, after Easter. By 21 June, the government hopes to be able to lift the restrictions on socialising - dependent on the success in curbing Covid-19.

Joe Morris, leisure partner at law firm Gowling WLG, says the travel industry can perform well once the lockdown is over:

“This demonstrates that subject to any further diversions from the current course the Government has set, the industry and investment interest around it is poised to perform well.

Staying on track with the plans in place now should ensure the industry strengthens and – vitally - evolves to meet the new needs of travellers in a post-lockdown environment.”


Economists: Jobless rate could hit 6.5% this year

City economists fear that the UK unemployment rate will continue to rise this year, especially if the furlough scheme isn’t extended beyond the end of April (the current cutoff)

Thomas Pugh, UK economist at Capital Economics, predicts it could hit 6.5% by the end of 2021:

The rise in the unemployment rate in December is another step up on the climb towards the 6.5% peak we expect by the end of the year.

But if the government follows the roadmap that it laid out on Monday and eliminates most COVID-19 restrictions by June, then the jobless rate may be back at its pre-pandemic level of 4.0% in 2023.

ING’s James Smith warns that unemployment could rise faster if the furlough scheme (which covers the wages of temporarily sidelined workers) ends ‘fairly abruptly’.

“The latest UK jobs data provides further evidence that the jobs market stabilised in the final weeks of 2020, following a turbulent autumn. Redundancies had spiked towards the end of the summer, no doubt as businesses began preparations for the removal of wage support, which was original due to be heavily reduced at the end of October. But the furlough scheme was subsequently fully extended, and this latest data shows that this helped the unemployment rate to settle slightly above 5% - around a percentage point above its pre-virus level.

We suspect we’ll see a similar pattern when we get the data covering the first few months of 2021, and in fact the latest real-time payrolls data suggests employment actually notched marginally higher in January. While recent ONS survey data indicates over half of hospitality/consumer-services businesses have less than four months of cash reserves, so far this doesn’t appear to be translating into job losses.”

“These figures give a rough idea of how far unemployment could rise when job support is tapered. We suspect that the unemployment rate will rise to around 6-6.5% through the middle of the year, and potentially higher if wage support is removed fairly abruptly in the second quarter.”

CIPD: Chancellor should extend furlough scheme

Gerwyn Davies, senior policy adviser at the CIPD [Chartered Institute of Personnel and Development] says today’s unemployment report shows the government needs to extend the furlough scheme.

The job retention scheme is due to finish at the end of April. But, with some lockdown restrictions in place until June, further support will be needed.

Davies says:

“These are very good figures for an economy passing through a fragile and uncertain period. It is encouraging that the number of people in work increased for the second consecutive month and that the number of job vacancies continues to tick up. What is more remarkable is that the relative improvement in the labour market is due to a rise in the number of full-time employees, which has risen to a record high.

UK vacancies
UK vacancies Photograph: ONS

“However, the most worrying concern is that the economy continued to shed jobs at the turn of the year at a very high rate, even if there are tentative signs that redundancy activity has fallen from its peak. Another worrying feature of the latest figures is the deteriorating job prospects for older workers. This age group has not only suffered the largest quarterly rise in unemployment but were also the most likely age group to be made redundant.

“Taken in the round, the latest jobs figures indicate that the labour market continues to withstand the pandemic headwinds better than anybody could have expected. However, it remains in a far from healthy state, which underlines further the need for the Chancellor to extend the furlough scheme into the summer.”

UK redundancies
UK redundancy rate Photograph: ONS


Labour: Another million jobs could be lost

The UK unemployment total rose to 1.744m people in October-December, up from 1.365m in January-March, just before the first lockdown.

Anneliese Dodds MP, Labour’s Shadow Chancellor, fears that many more will lose their jobs this year:

“These figures reveal the full scale of Rishi Sunak’s jobs crisis. We’re already in the worst economic crisis of any major economy, there are now 1.74 million people out of work, and forecasts suggest another million will lose their jobs in the coming months.

“The Chancellor should learn from the mistakes he made last year, when his last-minute extension to the furlough scheme came too late to prevent record redundancies.

“Britain just can’t afford to wait any longer for this government to act. That’s why today Labour is calling on the Conservatives to back our plan to secure our economy and rebuild stronger, with a relentless focus on jobs, growth and protecting family finances.”

Employment minister: glimmers of hope

Minister for Employment Mims Davies MP says there are ‘glimmers of hope’ in today’s unemployment figures:

“Today’s figures highlight the challenges people are still facing, but there are glimmers of hope with employment relatively stable, over 600,000 people moving onto payrolls* and hours worked up.

“With the Prime Minister setting out the roadmap to cautiously ease lockdown and the vaccine rollout protecting millions of people, we’re looking ahead to our recovery – our Plan for Jobs is creating new opportunities, boosting skills, and delivering a package of support for people of all ages, getting Brits back into work as we push to build back better.”

[* - this is the gross increase; overall, payrolls rose 83,000 in January, as this chart shows].

Nearly half the payroll jobs lost in the pandemic have been in accommodation and food businesses, today’s labour market report shows.

Retail also suffered large job losses, with the pandemic lockdowns forcing store closures.

The ONS reports that:

Of the 726,000 decrease in payrolled employees since February 2020, 345,000 can be attributed to employees working in the accommodation and food services sector, 149,000 in the wholesale and retail sector, while only 2,000 can be attributed to employees working in the education sector.

More than 100,000 jobs have been created in the health and social care sector, though, to fight the health emergency:

UK unemployment changes
UK unemployment changes Photograph: ONS

Sunak: every job lost is a personal tragedy

Chancellor of the Exchequer, Rishi Sunak, says he will present the next stage of the government’s ‘Plan for Jobs’ in next week’s budget:

“I know how incredibly tough the past year has been for everyone, and every job lost is a personal tragedy. That’s why throughout the crisis, my focus has been on doing everything we can to protect jobs and livelihoods”

“At the Budget next week I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the remainder of the pandemic and our recovery.”

Average pay grew strongly at the end of last year, with basic pay (excluding bonuses) rising by 4.1% per year. Total pay jumped by 4.7%.

Normally that would be welcome news for workers -- but it’s partly because poorly-paid staff are more likely to have lost their jobs during the pandemic. That ‘compositional effect’ pushes average pay up.

Pay packets were also boosted by bonuses which were delayed from earlier in 2020.

UK average earnings
UK average earnings Photograph: ONS

The finance and business services sector saw the highest estimated growth in total pay, at 6.8%. All sectors saw positive growth, although construction (1.9%) and manufacturing (1.5%) had smaller growth than the other sectors.

Underlying pay growth is probably around 3%, the ONS suggests.

This chart shows how UK payrolls (a good measure of employment) tumbled last year, before rising slightly in December and January:

UK payrolls
In January, 83,000 more people were in payrolled employment than in December, but there are still 726,000 fewer people in payrolled employment than February 2020. Photograph: ONS

ONS: Labour market may be stabilising

Jonathan Athow, the UK’s deputy national statistician, says there are “tentative” signs that the UK’s labour market was stabilising at the end of last year, given the rise in company payrolls in the last two months:


Introduction: UK unemployment rate rises to 5.1%

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.
Britain’s unemployment rate has risen to its highest level since early 2016, as the Covid-19 pandemic continues to hit the labour market - particularly younger workers.

But, there are also signs that the jobs market is stabilising, with a small increase in the number of payrolled employees in December and January, and a pick-up in vacancies.

The UK jobless rate rose to 5.1% in the last three months of 2020, according to the latest official labour market figures. That’s up from 5% a month earlier -- and just 3.8% at the end of 2019.

It’s the highest in almost five years, but the jobless rate is still lower than during the financial crisis a decade ago (with the furlough scheme cushioning the impact of the lockdown.).

UK unemployment statistics to December 2020
UK unemployment statistics to December 2020 Photograph: ONS

The Office for National Statistics reports that since February 2020, the number of payroll employees has fallen by 726,000 -- showing the scale of last year’s job losses.

Encouragingly, though, 83,000 more people were in payrolled employment in January than in December, the second monthly increase in a row after the November national lockdown.

The number of vacancies also rose at the end of 2020, but there are still only three-quarters as many opportunities as a year ago.

Employees at the start of their careers have born the brunt of the pandemic job losses, as the ONS says:

New analysis by age band shows that the 18 to 24 years age group has seen the greatest decrease in payrolled employees since February 2020.

The ONS also reports that, in October to December 2020, there were 32.39 million people aged 16 years and over in employment, 541,000 fewer than a year earlier. This was the largest annual decrease since May to July 2009.

Here are the key points from the report:

  • In January 2021, 83,000 more people were in payrolled employment when compared with December 2020; this is the second consecutive monthly increase.

  • In January 2021, 726,000 fewer people were in payrolled employment when compared with February 2020.

  • The UK employment rate, in the three months to December 2020, was estimated at 75.0%, 1.5 percentage points lower than a year earlier and 0.3 percentage points lower than the previous quarter.

  • The UK unemployment rate, in the three months to December 2020, was estimated at 5.1%, 1.3 percentage points higher than a year earlier and 0.4 percentage points higher than the previous quarter.

  • The redundancy rate, in the three months to December 2020, was estimated at 12.3 people per thousand employees.

  • The Claimant Count increased in January 2021, to 2.6 million; this includes both those working with low income or hours, and those who are not working.

  • There were an estimated 599,000 vacancies in the UK in November 2020 to January 2021; this is 211,000 fewer than a year ago and 64,000 more than the previous quarter.

More reaction to follow...

Also coming up

Worries about rising inflation and predictions of a commodities super-cycle are driving the markets right now, with copper prices at their highest level in over nine years.

America’s top banker, US Federal Reserve chair Jerome Powell, will testify to Congress later today. He’s expected to tell US Senate banking committee that the Fed remains committed to its stimulus programme. But, with US government bond yields rising, could the Fed be forced to tighten policy sooner than planned?

The agenda

  • 7am GMT: UK unemployment report for the three months to December
  • 10am GMT: Eurozone inflation report for January
  • 2pm GMT: US house price index for December
  • 3pm GMT: US Federal Reserve chair Jerome Powell testifies to Congress